Joe Biden by Gage Skidmore is licensed under CC BY-SA 2.0

On June 20th, 2024, The Hill published a op-ed by ATR’s Federal Affairs Manager for Telecommunications, James Erwin.  

The op-ed discusses the Biden administration’s failed strategy on international semiconductor competition, highlighted by China’s recent flurry of investment into domestic microchip manufacturing. Through the CHIPS and Sciences Act, the Biden administration has overseen unprecedented subsidies and export controls in pursuit of American semiconductor dominance.  

However, cutting China off from advanced American chips has only pushed the Chinese Communist Party to new levels of technological self-sufficiency. Following a recent $48 billion investment in chipmaking, the CCP has responded to the Biden administration’s aggression by winding down its dependence on American and Taiwanese semiconductor suppliers. By surrendering this advantage, the Biden administration simultaneously undermined American semiconductor dominance and placed Taiwan within the crosshairs of a potential Chinese invasion.  

The piece begins with Erwin providing a contrast between recent American and Chinese semiconductor investments, which have undermined our manufacturing and export dominance: 

Biden’s industrial policy has put chipmaking front and center, dumping more than $50 billion on building new fabrication plants (“fabs”) in the U.S. and imposing export controls that have cut China off from most of the world’s supply. Protectionists and Dark Brandon memers may rejoice, but all this has done is push the Chinese Communist Party to make its own $48 billion investment in chip making. 

Not only has Biden cut off a major market for chip exports and reduced China’s dependency on American manufacturing, but he has also incentivized China to distort the global market, harming our chipmakers further.  

Erwin also highlighted the devastating toll that Chinese export regulations would take on the American economy:  

The U.S. semiconductor industry directly and indirectly employs over 1.8 million Americans in at least 44 states and generates $264 billion in revenue, according to industry reports. Cutting off the Chinese market (which will be as large as France, Germany and Italy’s consumer markets combined by next year) and forcing the taxpayer to make up the difference through subsidies puts these jobs at risk. 

However, the end of Western semiconductor dominance is not a foregone conclusion: 

To be clear, China is not yet capable of making the high-end chips that Western firms specialize in, although it is only a matter of time if they are unable to import them. For now, they make “mature chips” for products like toys and cars, not cutting-edge components for high-level computing. China is dependent on these chips to manufacture and export the products that have made them the world’s second-largest economy.  

Nevertheless, in addition to an American trade defeat, Erwin explains how Chinese semiconductor dominance could threaten the stability of the Asia-Pacific region.  

Taiwan has long relied on the so-called “silicon shield” of its chipmaking dominance to deter Chinese aggression. So long as China depends on Taiwan to produce both mature and advanced semiconductors, any invasion of the island would destroy its “fabs”, crippling the Chinese economy.  

But if China becomes self-sufficient in mature chips, enough to supply its manufacturing base and maintain its exports, that deterrence is lost. By cutting China off from Taiwanese chips, Biden has put the island in greater danger. 

In the face of these multifaceted threats, Erwin concludes by stating that:  

Biden’s chips policy has backfired. It has weakened American companies exporting to China, diminished American dominance of the technology supply chain and reduced deterrence of a Chinese invasion of Taiwan. Instead of overplaying our hand as the global leader in technology, the administration should embrace trade that cements American hegemony. 

Read the full op-ed here